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Efforts to use weight-loss surgery to fight diabetes suffered a setback Monday, November 17, when Medicare officials said the government-run health care program no longer intends to cover bariatric surgery for people with diabetes who are not severely obese.

As the largest single payer of health care in the country, Medicare’s proposal to no longer cover a medical procedure strongly influences what procedures employers and health insurers will cover.

Medicare already covers bariatric weight-loss surgery for individuals considered morbidly obese, a decision that has led to the growth in popularity of the surgery and a willingness among employers to cover it.

Until Monday’s announcement, Medicare also covered the surgery for people with Type 2 diabetes. Citing a lack of efficacy, however, the agency said it would no longer pay for the surgery for Type 2 diabetics whose body mass index was below the threshold of 35, indicating severe obesity. Body mass index above 40 is considered morbidly obese.

“We have said definitely Type 2 diabetes is a cause for the surgery, but we’re limiting it to patients with BMI over 35,” said Medicare spokesman Don McLeod.

Research published this year in the Journal of the American Medical Association that showed significant health improvements for obese diabetics who underwent the surgery gained wide attention and sparked interest among employers who believed the high cost of the surgery—between $15,000 and $30,000—could be justified if it reduced health care costs associated with diabetes. The 60 people in the trial had a body mass index between 30 and 40.

But Medicare, in justifying its proposal, said generally that studies examining the efficacy of the surgery for diabetics did not sample a wide enough group to conclusively show the same kind of benefit for diabetics who were not morbidly obese.

“While recent medical reports claimed that bariatric surgery may be helpful for these patients, Medicare did not find convincing medical evidence that bariatric surgery improved health outcomes for non-morbidly obese individuals,” the agency said in a statement.

Medicare’s decision will be open to public comment for 30 days.

—Jeremy Smerd

Final Labor Department regulations issued Friday, November 14, resolve numerous questions employers have raised about legislation enacted this year that expands the Family and Medical Leave Act for employees whose family members are in the military.

That new law expands the FMLA in two ways for military families. Under the first expansion, spouses, children, parents or nearest blood relatives can take up to 26 weeks of leave under the FMLA to care for a service member who is injured or becomes ill while on active duty. The illness or injury must be severe enough that the service member is unable to perform his or her duties.

Under the second expansion, employees are allowed to take up to 12 weeks of leave when a spouse, child or parent is on active duty in the armed forces or is called up for active duty. Leave is allowed for any “qualifying exigency.”

The final regulations make clear that an employee is entitled to a maximum of 26 weeks of leave during a 12-month period. For example, if a working parent took 26 weeks of leave to care for an injured child, the parent could not take another 26 weeks of leave during the same 12-month period if a second child were injured.

In addition, the 26-week leave limit is a per-injury limitation. For example, if an individual injured an arm and a working parent used 26 weeks of leave to care for the child, the parent could not take additional leave in a subsequent period to provide care for the same injury.

However, the employee could use up to 26 weeks of leave to care for a child’s injury and then take another 26 weeks of leave in a subsequent 12-month period if the child incurred a second injury during a later period.

The regulations also provide numerous examples of “qualifying exigencies,” including rest and recuperation, post-deployment activities and additional activities where the employer and employee agree to the leave.

The final regulations also provide guidance on nonmilitary-related parts of the FMLA. For example, the regulations make clear that employees working on “light duty” cannot have that time count against their 12-week FMLA entitlement.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.

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Goldman Sachs said Sunday, November 16, that CEO Lloyd Blankfein and CFO David Viniar—along with five other top officers—will not get bonuses for 2008. According to Financial Week’s list of the highest-paid CFOs, Viniar received a nearly $23 million bonus in 2007.

Blankfein and Viniar, along with presidents and co-chief operating officers Jon Winkelried and Gary Cohn and vice chairmen J. Michael Evans, Michael Sherwood and John Weinberg, asked the board’s compensation committee Sunday morning that they not receive a bonus, spokesman Lucas van Praag said.

The compensation committee met and agreed, van Praag said.

The executives will only be eligible for a base salary of $600,000 each, The Wall Street Journal reported.

Last year, Blankfein made $68.5 million; Winkelried and Cohn received $67.5 million.

Viniar’s bonus for 2007 pushed the CFO’s total compensation to $57.5 million for the year. That made him by far the highest-paid finance chief in the U.S., according to Financial Week.

The second CFO on the list, Occidental Petroleum’s Stephen I. Chazen, earned just under $30 million last year.

New York Attorney General Andrew Cuomo said Goldman had taken “an important step in the right direction.”

Last month, Cuomo warned Goldman and eight other banks getting U.S. government money in the first round of capital injections under the $700 billion Troubled Asset Relief Program that using the funds for bonuses might break state law.

“This gesture by Goldman Sachs is appropriate and prudent and hopefully will help bring Wall Street to its senses,” Cuomo said in a statement Sunday. “We strongly encourage other banks to follow Goldman Sachs’ step.”

On September 16, Goldman posted a 70 percent drop in quarterly profit, its biggest earnings decline since going public in 1999, as the worst market slump in decades led to weaker-than-expected revenue.

Several analysts expect the company to post a fourth-quarter loss, which would be its first ever as a public company.

Its shares are down 69 percent so far this year.

Filed by Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

In a massive new round of layoffs, Citigroup Inc. is cutting at least 53,000 jobs in its investment bank and in other divisions throughout the world, according to The Wall Street Journal.

The move comes as Citigroup CEO Vikram Pandit works to stabilize the New York-based financial services company, which has posted more than $20 billion in net losses during the past year.

Pandit will address employees in a town hall-style meeting Monday morning, November 17.

He and his deputies have instructed officials at the company to reduce employee compensation by at least 25 percent, the report said.

Managers can minimize the number of employees laid off by cutting higher-paid traders and bankers, according to the report.

Earlier this month, Citigroup began notifying employees who were affected by its previous plan to slash 9,100 positions over the next month. That figure was about 2.6 percent of its 352,000-person workforce.

During the past 12 months, the company has disclosed plans to cut approximately 23,000 jobs.

Citigroup is aiming to pare down its workforce to about 290,000 employees by next year, another person said.

In another move, Citigroup is notifying about 20 percent of its credit card customers that their interest rates are being increased by an average of three percentage points, according to the Journal.

The company, which has 54 million active credit card accounts, posted a loss of $902 million in the third quarter, compared with $1.4 billion in profit in the year-ago period, as more credit card holders defaulted on their payments.

A spokeswoman for Citigroup declined to comment specifically on the cuts but said: “We are showing good traction on cutting our expenses, and we are selling businesses and shedding assets that don’t fit our strategic profile. We will continue to carefully manage our headcount levels as we re-engineer the company in line with our stated goal and market realities.”

Filed by Aaron Siegel of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.

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Four years ago, officials at the Metropolitan Development Association of Syracuse and Central New York were thrilled to learn that New York City-based AXA Financial was considering moving its service operations from Secaucus, New Jersey, to their area.

The association, which is made up of 200 local employers, had been struggling to create job growth in the region. So they were justifiably excited when they first heard of AXA’s new office in Syracuse and the 300 jobs that came along with it.

When AXA officials asked for data that would demonstrate the region has a pool of talent to facilitate the new office, Frank Caliva, the association’s director of talent initiatives, knew he had to act fast.

“They needed to know that we had a pipeline of marketing people, accountants and lawyers,” he says. “We got the data together, but it took a full seven business days.”

While AXA ultimately opened its office in Syracuse, Caliva and his team started looking at ways they could more quickly provide talent-pipeline data to prospective employers.

Now it seems they have found it. The association is implementing a new Web-based tool that will enable it to provide companies with real-time data on what talent the region has and what talent needs to be developed, Caliva says.
 
The tool, developed by Kingston, Tennessee-based Worldwide Interactive Network, enables users to tap 70 databases, including government and university databases, to provide a real-time snapshot of a region’s workforce and workforce needs.

“Frankly, we were getting outmaneuvered by other states that could get this data faster,” Caliva says. “But this software will help us be more competitive.”

The software, which is two years old, isn’t yet available to private employers. But it has been implemented by regional entities in Alabama and Tennessee and by the Department of Commerce in South Carolina, says Teresa Chasteen, president of Worldwide Interactive Network.

The WIN Strategic Compass is designed to help public entities, such as states and universities, not only understand what skills they have, but what talents need to be developed, Chasteen says.

“Our goal is to connect economic development and education through a workforce delivery system,” Chasteen says. She notes that many universities have told her the software would help cut research time by 60 percent.

Employers want this kind of information before they relocate or expand into an area, but getting it on a real-time basis is unheard of, says Jamie Hale, director of workforce planning at Watson Wyatt Worldwide.

“We get a lot of requests from clients asking about what the demand versus supply is of certain skill sets in areas they are looking to enter,” she says.

The recent financial crisis drained retirement funds worldwide by $4 trillion, according to an estimate from the Organization for Economic Cooperation and Development.

The estimate was released Wednesday, November 12, at an OECD seminar in Paris in a presentation by Pablo Antolin, principal economist at the organization’s financial affairs division.

“The main message is that losses are substantial and dependent on the asset allocation of pension funds in a specific country,” Antolin said.

The estimate—that defined-benefit and defined-contribution plans lost the money from January 1 to early November—was calculated by using the OECD’s own asset allocation data by country as of December 31 and applying global equities, bonds and cash index returns to those allocations.

Losses were highest in Ireland, the U.S. and the Netherlands, where exposures to equities were the highest at the end of 2007. Pension funds in those countries lost 20 percent or more of assets on average, according to the OECD’s Web site. Pension funds in South Korea and Luxembourg, where equity exposures are very low, have experienced minor losses.

Funding levels have declined 5 to 15 percentage points on average, depending on the discount rate used, and the OECD expects that when year-end data are reported, the figures will be worse.

Filed by Drew Carter of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

The volatile stock market and struggling economy have companies intensifying due diligence on all of their vendors.

As a result, a growing number of human resources executives are working more closely with their procurement departments to make sure they are current on the financial viability of their HR vendors, experts say.

“This is a very hot topic of discussion right now,” said Michel Janssen, managing director at Hackett Group, a Miami-based business process outsourcing consultant.

Procurement departments at companies usually are in charge of keeping tabs on the financial viability of all company vendors. But given the unpredictable nature of today’s markets, it’s essential that HR talk to procurement managers about what they believe would be red flags of financial viability issues, experts say.

“Procurement is doing the risk assessment from the top and bottom, but HR should be helping and comparing notes,” Janssen said.

At Prudential Financial, HR has its own team monitoring vendors. The company is keeping a particularly close eye on financial institutions, said Suzanne Manganiello, vice president of risk management at the Newark, New Jersey-based company.

“Any relationships we have with financial institutions are of higher risk,” Manganiello said. For example, JPMorgan Chase is the pension payroll provider for Prudential.

In the past, Prudential’s HR risk managers would run quarterly reports on all of its vendors, but given the current economic situation, the company is doing this much more frequently, Manganiello notes. “We have people Googling companies and data mining constantly,” she said.

While Prudential is one of a number of companies that have executives like Manganiello, whose job is to monitor HR risks at the organization, many companies do not, experts say.

“At many companies, this is the first time in history that HR has spoken to procurement,” Janssen said.

And these conversations between HR and procurement should be ongoing, advises Naomi Bloom, an HR business process outsourcing consultant.

“My standing advice to HR executives is that they should not just evaluate vendors when they are in the dating process, but they need an ongoing competitive intelligence gathering process so that they are never surprised about what is happening at vendors,” Bloom said.

Bloom advises companies to use the Internet, particularly social networking sites such as LinkedIn and Glassdoor.com, to keep tabs of what’s occurring at vendors.

“Find out if the vendor is getting any buzz,” she said.

Unfortunately, even the most thorough due diligence might not enable an employer to foresee a problem with a vendor, Janssen warns.

“There is no magic tool in this market,” he said. “A high credit rating doesn’t guarantee anything.”

—Jessica Marquez

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Morgan Stanley plans to lay off 9 percent of employees in its asset management group as a result of closing and consolidating nonperforming and overlapping investment funds. The firm also plans to lay off 10 percent of its institutional securities staff.

“The firm is resizing its cost base and headcount to match current opportunities in the marketplace, while reallocating resources to those businesses that provide an attractive risk-adjusted return on capital,” said spokeswoman Erica Platt.

She declined to comment on specifics of the layoffs or which funds were being closed or consolidated.

The asset management division had $570 billion in assets under management as of August 31.

Filed by Jing Zhou of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.

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Morgan Stanley CFO Colm Kelleher on Wednesday, November 12, indicated that the onetime investment bank will be cutting more jobs.

Kelleher, who was speaking at a conference sponsored by Merrill Lynch, said Morgan Stanley would reduce headcount in its asset management group by 9 percent. He said that any new cuts would be in addition to the 10 percent reduction in staff the bank made earlier this year.

He added that markets were “incredibly dislocated.”

Meanwhile, the bank’s co-president, James Gorman, said Morgan would be scaling back operations in prime brokerage, proprietary trade, principal investments and commercial real estate origination.

He stated that Morgan planned to reduce headcount by 10 percent across its institutional securities businesses.

“We’re very mindful of the environment that we live in at the moment,” Gorman said, and the bank would “rationalize” headcount and costs accordingly.

Filed by John Goff of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce com.